Wednesday, October 31, 2007

Hong Kong’s Hang Seng Property Index jumped the most in nine years, led by Hang Lung Properties Ltd

Hong Kong’s Hang Seng Property Index jumped the most in nine years, led by Hang Lung Properties Ltd, on expectations the US Federal Reserve may further cut interest rates, helping push up property prices in the city.

The index, which tracks the performance of the city’s five biggest developers by market value including No 1 Sun Hung Kai Properties Ltd, jumped as much as 8 per cent yesterday, the biggest increase since October 1998. It gained 4.9 per cent to 38,870.45 at 3.30pm here yesterday.

The US Federal Reserve will likely cut borrowing costs this week, according to futures traders, which may trigger a rate cut here, boosting the real estate market. A record stock market boom, four years of economic expansion and rising investment from the mainland are also fuelling property prices here.

‘Investors expect more interest-rate cuts, which will help sustain the real-estate market and the property stocks’ rebound,’ said Mona Chung, who helps manage US$2.5 billion at Daiwa Asset Management.

Hang Lung Properties, the best performing property stock in the benchmark Hang Seng Index this year, jumped 7 per cent to HK$39.05.

Henderson Land Development Co climbed 5.2 per cent to HK$68.20 and Sino Land Co rose 0.4 per cent to HK$24.75.

Interest-rate futures show traders forecast a 69 per cent chance the US Federal Reserve will lower borrowing costs by a quarter-percentage point to 4.5 per cent when it meets tomorrow, up from 59 per cent a week ago. — Bloomberg